Statutory demand is considered to be one of the strongest weapons for debt collection. And why not - it avoids bankruptcy petitions.

What is a statutory demand first of all? This is a document that is served by a creditor to a company for a debt which exceeds $2,000 and which has to be paid by the company to the creditor. This is defined under the Corporations Act.

Forza Finance v Vergepoint Facts

·         In Forza Finance Pty Ltd v Vergepoint Sales and Mangement Pty Ltd [2010] QSC 46, a statutory demand which was issued by the creditor stated that for the purpose of service of any application was the business address of the creditor's solicitor but it did not mention anything about the fax details of the creditor in the body of the demand.

·         The cover letter of the demand had the fax details of the creditor’s solicitor, via which the debtor faxed his reply for setting aside the statutory demand.

·         The debtor also posted a copy to the business address of the creditor's solicitor, which reached the solicitor but after the deadline.

·         The creditor disputed the debtor’s application and method of correspondence via fax.

Summary

The Supreme Court of Queensland whilst recognizing the importance of timely service rejected the creditor’s objections.

The Court held that the mode of service used by the debtor was appropriate to set aside the statutory demand - it did not matter that it was not synonymous with the mode of service as specified in the demand since the documents were sent to the address for service.

Implications

The pragmatic approach of the Court reflects the flexibility afforded with rapid technological means of communicating. To have decided to the contrary would have stifled the ‘instantaneous’ means of conducting business and resolving debt collection cases.